Cardinal Midstream Wins $52M Case Against Energy Transfer
Major Legal Win for Cardinal Midstream
In a significant legal development, a state court awarded over $51 million to Cardinal Midstream II, LLC following a protracted dispute with Energy Transfer, LP. This ruling stems from a contract disagreement regarding an earnout payment that was owed to Cardinal, leading to an important precedent in contract enforcement within the energy sector.
Background of the Dispute
The contract in question involved Energy Transfer’s obligations stemming from the 2017 acquisition of a gathering system from Cardinal Midstream and its joint-venture partner. According to the court, Energy Transfer failed to pay a substantial earnout of $33 million, breaching contract terms critical for operational integrity. The judge's ruling rejected Energy Transfer’s defense that cited force majeure, highlighting negligence in the construction of the Revolution Pipeline as a contributing factor to a dangerous explosion that occurred shortly after the earnout timeline commenced.
The Court's Findings
Judge James J. Ross presided over an 18-day bench trial that unfolded over several months, which featured over 1,500 exhibits and a wealth of testimony from various witnesses. The court's findings were deeply critical of Energy Transfer’s actions, describing them as fueled by greed, which compromised the operational viability of the gathering system. The judge underscored the company's decisions left the system incapable of fulfilling the earnout terms.
Key Testimonies and Evidence
The testimony during the trial revealed discrepancies among Energy Transfer executives, particularly the company's vice president of crude oil, whose responses were deemed evasive when confronted with challenging cross-examination. The trial presented a vivid picture of a corporate culture that prioritized profit over regulatory compliance and contractual fidelity.
Reactions to the Judgment
Joel Reese, lead attorney for Cardinal, indicated that the firm joined the case shortly before the trial, but their strategic litigation approach was pivotal to the outcome. The RM team’s commitment was evident in their extensive preparation, which included a comprehensive evaluation of the evidence and a deep dive into the corporate conduct of Energy Transfer.
The Legal Team
The legal force representing Cardinal Midstream consisted of several affiliated attorneys from Reese Marketos, including Pete Marketos, Josh Russ, Adam Sanderson, and Whitney Wendel, along with paralegal Dee Dee Carr. Their collaborative effort demonstrated the importance of a skilled legal team in achieving victorious outcomes in complex commercial litigation.
A Closer Look at Reese Marketos
Founded in 2011, Reese Marketos has developed a reputation in Dallas as a leading trial boutique specializing in significant commercial litigation. The firm’s experience in high-stakes cases positions them as a formidable opponent in the legal arena, particularly against entrenched industry players like Energy Transfer. With a diverse portfolio, they handle cases that range from millions of dollars to extremely high-stakes corporate disputes.
This victory for Cardinal Midstream not only fortifies their position but also sends a message to others in the industry about the necessity of upholding contractual obligations and the repercussions of negligence in corporate conduct.
Frequently Asked Questions
What was the outcome of the trial between Cardinal Midstream and Energy Transfer?
Cardinal Midstream was awarded $51.98 million by the court, including $33 million in damages and additional interest.
Who presided over the Cardinal Midstream case?
The case was presided over by Judge James J. Ross.
What was the primary reason for Energy Transfer's liability?
Energy Transfer was found liable for failing to make the required earnout payments as per their contractual agreement with Cardinal Midstream.
What role did the trial team play in this judgment?
The trial team at Reese Marketos worked extensively to prepare and present the case, which was crucial in achieving the favorable ruling for Cardinal Midstream.
How does this ruling impact the energy sector?
This ruling emphasizes the importance of contractual compliance and serves as a warning regarding the consequences of failing to meet contractual obligations in the energy sector.
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